AOYAMA BUSINESS SCENTS

Florist brings affordable flowers to the masses

Hideaki Inoue, president of the company that runs the Aoyama Flower Market chain, earlier in life had no particular interest in flowers. But today, the former accountant cannot live without them.

“Flowers enrich people’s spiritual lives,” said Inoue, 44, who surrounds himself at home and in the office with flowers and greenery.

The entrepreneur, whose corporate slogan is “living with flowers every day,” wants as many people as possible to enjoy the beauty of flowers.

Most of Park Corp.’s 60 Aoyama Flower Market shops, boasting baskets full of floral color, are located near train stations and department stores.

Ready-made bouquets are kept affordable so people can buy them on a daily basis. The smallest clusters are priced at ¥368, and the most expensive medium-size bouquets sell for ¥1,575.

When Inoue opened his first shop in Tokyo’s upscale Aoyama district in Minato Ward in 1993, most bouquets on the market were large and costly — ¥5,000 to more than ¥10,000.

Inoue thought small, setting up his first shop in 36 sq. meters of floor space near a building’s staircase where there were already plants arrayed. He negotiated with the owner to get a huge discount in rent.

“I said if I opened a shop in that space, the owner would no longer have to pay for the plants, while earning rent and having lots of flowers instead,” Inoue said.

He was able to rent the space at about half the going rate. By keeping his rent low, Inoue could offer his flowers at lower prices. In the process, he defied the common notion that flowers are expensive and only for special occasions.

His marketing and pricing strategies proved effective.

Park’s annual sales grew by more than six-fold to ¥3.84 billion in 2006 from ¥610 million in 2000, and the chain now has 400 employees, including part-timers. The outlet adjacent to JR Shibuya Station near the Tokyu Department Store draws 600 to 700 customers a day.

It’s not just the low prices that make the chain popular.

Inoue uses flowers, plants and nuts that have been deemed unsuitable for bouquets by other florists to make stylish, novel arrangements. He says that knowing nothing about flowers allowed him to try new things.

Small vases, priced between ¥500 and ¥1,000, are also selling well as customers buy small bouquets on a daily basis.

“I find a similarity between wine and flowers,” Inoue said, pointing to the emergence of good but inexpensive wine, which helped expand consumption in Japan. “Both used to be expensive and were considered something for special occasions in the past. But now, both are becoming something to enjoy on a daily basis.”

Inoue did not initially aspire to become a florist and his encounter with the flower business happened by accident.

Key events in Hideaki Inoue’s life

1963 — Born in Kashima, Saga Prefecture.

1987 — Goes to New York to work at an American accounting firm after graduating from Waseda University in Tokyo, where he studied economics.

1988 — Returns to Tokyo and establishes event company Park Corp.

1989 — Enters the flower business.

1993 — Opens first Aoyama Flower Market store in the Aoyama district in Minato Ward, Tokyo.

After graduating from Waseda University in Tokyo in 1987, Inoue joined a U.S.-based accounting firm and went to New York. But a little more than a year later, he quit, realizing something was wrong about his job.

Soon after returning to Tokyo, Inoue established Park in 1988 as an event organizer. He arranged various kinds of parties, including weddings. Then he began looking for a side business to generate cash flow to get the event business running.

A friend in the flower business introduced him to a wholesale flower market, where he saw that prices were far lower than what retailers charge.

“A rose was trading at ¥150 on the market at the time, when it retailed for ¥800 at shops,” he said.

It occurred to him that if he were to sell it at twice the wholesale price, it would still be less than half the store value.

But there was a reason flowers carried a hefty price tag.

Shops had to cover the losses from unsold flowers as well as rent.

“I thought if those factors were removed, I would be able to sell flowers at lower prices,” he said.

In 1989, Inoue began selling flowers to individuals using his network of personal connections. He approached friends, including one with a lawmaker father, and took orders by phone. He delivered flowers fresh from the wholesale market to the Diet members’ office and to companies.

In this way, he only sold what was ordered and did not have to set up a store.

Through word of mouth, his deliveries of low-priced fresh flowers gradually found more customers.

But not having a store had one disadvantage. He could not respond to urgent orders because there was no inventory. The time had come to set up a shop.

“At first, I wasn’t 100 percent committed to the flower business. I was always looking for a new business opportunity, believing there should be other lucrative businesses,” he said.

But a stay in a hotel that lacked flowers drove home the notion that he always wanted to be around them.

He would bring bunches home every day to develop an eye for his wares, and he realized that living with flowers had become part of his life.

“That is when I thought I’d focus solely on the business of spreading flowers in this country.”

Instead of having one customer buy a bouquet of 100 flowers, Inoue would rather sell one flower each to 100 people. To reach out as much as possible, the company continues to aggressively open new stores.

While everything appears to have worked well for Inoue, his fast expansion has brought a new dilemma — securing qualified staff.

“A major hurdle is hiring talented people,” he said. “We have to provide products and services that exceed customers’ expectations,” and educating staff is also important.

He said the company plans to open a new training facility in Minato Ward near the head office next month.

“I think there is still room for us to open 250 stores in Japan, especially in cities,” he said. “Then we want to go overseas someday.”

In this occasional series, we interview entrepreneurs whose spirit may hold the key to a more competitive Japan.